What Is a Value-Added Network (VAN)?
Let me explain what a value-added network, or VAN, really is. It's a private, hosted service that gives companies a secure method to send and share data with their business partners. VANs were popular for handling electronic data interchange (EDI) between companies, but with the rise of the internet and secure email, they've expanded to include message encryption, secure email options, and management reporting.
You should know that a VAN simplifies your communications by cutting down the number of parties you need to deal with directly. It acts as an intermediary between partners sharing standards-based or proprietary data. These networks come with audit features to ensure data is formatted correctly and validated before transfer. Sometimes, people call them added-value networks or turnkey communications lines.
Key Takeaways
- Value-added networks are often used for electronic data interchanging between companies.
- VANs make the communications process easier with communication between fewer parties.
- VANs are important for managing supply chains.
How a Value-Added Network (VAN) Works
VANs are typically used by large companies for efficient supply chain management with suppliers, or by industry groups and telecom firms. They operate like a mailbox system: you send a transaction to the VAN, it places it in the receiver's mailbox, the receiver picks it up, and then sends their own transaction back.
This setup is similar to email, but it's for standardized structured data instead of unstructured text.
VANs in the Internet Era
The widespread use of the internet has reduced the appeal of VANs, mainly because of costs. It's often cheaper to move data over the internet than to pay VANs' monthly fees and per-character charges. To counter this, VANs have focused on specific industries like healthcare, retail, and manufacturing, where data integrity and security are critical, making them a genuine value-added option.
Remember, VANs simplify communications by letting you deal with fewer parties. The data exchanged can go straight into the receiver's software, like an ERP system, speeding up commerce and cutting human errors from manual entry.
VANs also offer visibility tools for tracking data delivery and workflows, helping you coordinate activities without endless calls or emails. Using a VAN is more efficient, accurate, and saves on hiring data-entry staff.
Like other pre-internet tech, VANs have reinvented themselves. Today, they provide more than just EDI mailboxes—they handle message authentication, transaction archiving, automatic backups, secure web portal access, and unlimited data pricing.
